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U.S. Licensed Attorney Requirement for Foreign Trademark Applicants and Registrants

U.S. Licensed Attorney Requirement for Foreign Trademark Applicants and Registrants

The USPTO has amended the Rules of Practice in Trademark Cases to require applicants, registrants, or parties to a trademark proceeding whose domicile is not located in the United States or its territories to be represented by an attorney who is in an active member in good standing of the bar of a state in the United States.

A stated purpose of the rule change is to instill greater confidence in the public that U.S. trademark registrations that issue to foreign applicants are not subject to invalidation for reasons such as improper signatures and use claims. Another stated purpose is to enable the USPTO to more effectively use available mechanisms to enforce foreign applicant compliance with statutory and regulatory requirements in trademark matters.

The rule change is effective on August 3, 2019.

Supreme Court Finds Bar on Scandalous and Immoral Trademarks Unconstitutional

Supreme Court Finds Bar on Scandalous and Immoral Trademarks Unconstitutional

The Supreme Court has upheld the Federal Circuit’s decision in In re Brunetti, 877 F.3d 1330 (Fed. Cir. 2017) holding that the provision of the Lanham Act that bars the registration of “immoral or scandalous” trademarks violates the First Amendment. Iancu v. Brunetti, No. 18-302, 6/24/2019.

The trademark at issue is the mark “F U C T” which Brunetti uses for a clothing line. The Patent and Trademark Office (“PTO”) barred registration of this mark as being “immoral or scandalous” as required by the Lanham Act, categorizing “F U C T” as “a total vulgar,” “extremely offensive” and “therefore unregistrable” mark. Brunetti appealed the rejection.

In Matal v Tam (2017), a parallel provision of the Lanham Act that bars registration of disparaging marks was found unconstitutional as being viewpoint based. Similarly, the key question here is whether the “immoral or scandalous” provision is viewpoint neutral or viewpoint based.

The Court found the “immoral or scandalous” provision viewpoint based. Specifically, the Court noted that the Lanham Act “permits registration of marks that champion society’s sense of rectitude and morality, but not marks that denigrate those concepts” and that it “allows registration of marks when their messages accord with, but not when their messages defy, society’s sense of decency or propriety.” As such, the Court held that “put the pair of overlapping terms together and the statute, on its face, distinguishes between two opposed sets of ideas: those aligned with conventional moral standards and those hostile to them; those inducing societal nods of approval and those provoking offense and condemnation.”

As such, the Court ruled that the Lanham Act’s ban on federal registration of “immoral or scandalous” trademarks is unconstitutional under the First Amendment.

In a concurring opinion, Justice Alito noted that the Court’s “decision does not prevent Congress from adopting a more carefully focused statute that precludes the registration of marks containing vulgar terms that play no real part in the expression of ideas.”

Supreme Court Finds Bar on Scandalous and Immoral Trademarks Unconstitutional

Bankruptcy and Trademark License Agreements

In Mission Product Holdings, Inc. v Tempnology, LLC (Supreme Court 2019), the Supreme Court addressed whether a rejection by a licensor in a bankruptcy proceeding “terminates rights of the licensee that would survive the licensor’s breach under applicable nonbankruptcy law.” The Supreme Court answered no to this question, holding that a rejection breaches a contract but does not rescind it.

Tempnology entered into an agreement with Mission that granted Mission a non-exclusive license to use Tempnology’s Coolcore trademarks. Before the expiration of this agreement, Tempnology filed for Chapter 11 bankruptcy and asked the Bankruptcy Court to allow it to reject this agreement.

The Bankruptcy Court approved the rejection, which meant that Tempnology could stop performing under the agreement and that Mission could assert a claim for damages resulting from Tempnology’s nonperformance. The Bankruptcy Court also agreed with Tempnology’s assertion that under a traditional view of Section 365 of the Bankruptcy Code, this rejection also terminated the rights it had granted Mission to use the Coolcore trademarks.

The Bankruptcy Appellate Panel reversed this holding based on a prior decision by the Court of Appeals for the Seventh Circuit that held that rejection of a contract “constitutes a breach” of that contract. The Appellate Panel explained that outside of bankruptcy, the breach of an agreement does not eliminate those rights that the agreement had already conferred on the non-breaching party.

The Court of Appeals for the First Circuit rejected the Appellate Panel’s decision and reinstated the Bankruptcy Court’s decision terminating Mission’s trademark license. The Court of Appeals reasoned that special features of trademark law required that the trademark license be terminated. Specifically, the majority reasoned that if a licensee can keep using a mark after an agreement’s rejection, the licensor will need to carry on its monitoring activities which would frustrate the principal aim of a rejection — namely, to release the debtor’s estate from burdensome obligations.

The Supreme Court rejected the Court of Appeals reasoning holding that a rejection breaches a contract but does not rescind it. The Supreme Court noted that according to the plain language of Section 365, a rejection “constitutes a breach of a contract,” deemed to have occurred “immediately before the date of the filing of the petition.”

The Supreme Court further noted that Section 365 reflects a general bankruptcy rule that the estate cannot possess anything more than the debtor itself did outside bankruptcy. This rule prevents a debtor in bankruptcy from recapturing interests it had given up, namely the rights to the trademark license.

Tempnology’s main argument rested on the negative inference drawn from the fact that Section 365(n) provides that licensees of some intellectual property rights retain contractual rights after rejection. The specific intellectual property rights including patents but do not trademarks. In response, the Supreme Court noted that in enacting Section 365(n), Congress did nothing to alter the natural reading of Section 365 that rejection and breach have the same result.

Tempnology also argued that a trademark licensor’s duty to monitor and “exercise quality control over the goods and services sold” required that rejection of the agreement also revoke the trademark license. The Supreme Court noted that in allowing rejection of an agreement, Section 365 does not grant the debtor an exemption from all the burdens that generally applicable law, including contracts and trademarks, imposes on property owners.

This ruling changes the traditional view of bankruptcy and emphasizes the need to clearly define in the trademark license agreement what happens to trademark license rights under various circumstances, including bankruptcy.

USPTO Issues Examination Guidance for Cannabis and Cannabis-Related Marks

USPTO Issues Examination Guidance for Cannabis and Cannabis-Related Marks

The 2018 Farm Bill amended the Agricultural Marketing Act of 1946 (AMA) to remove “hemp” from the Controlled Substances Act’s (CSA) definition of marijuana.

“Hemp” itself is defined as “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis.”

The newly issued Examination Guidance clarifies that the United States Patent and Trademark Office (USPTO) will refuse to register marks with goods that show a clear violation of federal law, regardless of the legality of those same goods under state law.

For applications filed on or after December 20, 2018, the Farm Bill removes the CSA as a ground for refusing registration if the associated goods are derived from “hemp” and the identification of goods specifies that they contain less than 0.3% THC.

For applications filed before December 20, 2018, the application may be amended to change the filing date to December 20, 2018, and to establish a valid filing basis. Specifically, if the original filing basis was use based, the application may be amended to change the filing basis to intent-to-use. Also, the original identification of the goods must be amended to specify that any identified CBD or cannabis products contain less than 0.3% THC.

Instead of amending the original application, the applicant may abandon the application or submit evidence and arguments against a pending refusal.

For applications that recite services involving the cultivation or production of cannabis that is “hemp,” the examining attorney will also issue inquiries concerning the applicant’s authorization to produce hemp. 

John C. Laurence
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